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ECONOMICS OBJ
01-10: DECEBEBCED
11-20: CBECECEDEC
21-30: CCCDDDECBB
31-40: CADACDADDD
41-50: DACBEBAABE
51-60: DDCDDECDDD
COMPLETED
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SECTION A: ANSWER ONE(1) QUESTION ONLY
(2)
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SECTION B: ANSWER FOUR(4) QUESTIONS ONLY
(3a)
(i) Transaction Motive:
Money is held to pay for everyday purchases and expenses, ensuring smooth financial transactions. People and businesses need cash on hand because income and expenses do not always occur at the same time. Without enough money for transactions, it would be difficult to meet regular financial obligations promptly.
(ii) Precautionary Motive:
Money is kept as a safety buffer to meet unexpected expenses or emergencies. Since life is uncertain, having cash readily available helps individuals and firms avoid financial stress during unforeseen events. This motive reflects the desire to be prepared for risks that cannot be predicted.
(iii) Speculative Motive:
Money is held to take advantage of future investment opportunities or to avoid losses if asset prices change. When people expect interest rates to rise or asset prices to fall, they prefer to hold cash rather than invest immediately. This allows them to buy assets later at more favorable prices, maximizing potential gains.
(3b)
(i) Loss of Investment Opportunity:
Holding too much cash means the money is idle and not earning returns. This leads to opportunity cost, as the funds could have been invested in assets that yield interest, dividends, or capital gains.
(ii) Reduced Purchasing Power Due to Inflation:
When inflation rises, the real value of cash decreases. Excessive cash holdings expose one to erosion of value over time, reducing the amount of goods or services it can buy.
(iii) Inefficient Capital Management:
For businesses, holding too much cash may signal poor financial planning or lack of viable projects. It may lead to lower returns on assets and reduce overall business efficiency.
(iv) Increased Risk of Theft or Misuse:
Holding large sums of physical cash increases the risk of theft, fraud, or embezzlement, especially if adequate security measures are not in place. It also may encourage impulsive or unplanned spending.
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(4a)
(i) In capitalism, the means of production are privately owned by individuals or businesses, while in socialism, the means of production are collectively or state-owned.
(ii) Economic decisions and prices are determined by market forces (supply and demand) in capitalism, whereas in socialism, these decisions are controlled by the government through central planning.
(4b)
(i) Private Ownership: In a free market economy, individuals and businesses own and control the factors of production, including land, labor, and capital. This ownership gives them the freedom to make decisions regarding the use of resources, production of goods, and delivery of services. Private ownership encourages entrepreneurship, innovation, and competition, which can drive economic growth and improve efficiency in resource allocation.
(ii) Price Determination by Supply and Demand: Prices in a free market economy are determined by the forces of supply and demand without government interference. When demand for a product increases, prices rise, motivating producers to increase supply. Conversely, when demand falls, prices drop, signaling producers to reduce output. This price mechanism plays a key role in efficiently allocating resources, ensuring that production aligns with consumer needs and preferences.
(4c)
(i) Lack of incentives for individuals to work harder or innovate.
(ii) Inefficiency in resource allocation due to central planning.
(iii) Limited consumer choice because of government control over production.
(iv) Excessive bureaucracy and government interference in the economy.
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(5a)
-FORMATION-
Co-operative Society:
A co-operative society is formed when at least ten people with a common goal like helping each other economically or socially. They agree on rules called bye laws that explain how the society will operate, what its goals are, and how money will be handled. They choose a unique name and apply to the Registrar of Co-operative Societies with all necessary documents. If approved, they receive a Certificate of Registration, which allows them to operate legally. The main goal of a co-operative is to support its members, not just to make profits.
Limited Liability Company (LLC):
An LLC is formed by one or more people who want to start a business and reduce personal risk. They prepare key documents like the Memorandum and Articles of Association and submit them to the Corporate Affairs Commission (CAC). Once all conditions are met, the CAC issues a Certificate of Incorporation, making the company a legal entity. This means the company can own property, sign contracts, and be sued in its own name. LLCs can also raise funds by selling shares to investors.
(5b)
-MANAGEMENT-
Co-operative Society:
Management is handled by a committee or board elected by all members. Every member has equal voting rights (one member, one vote), regardless of their financial input. The committee runs daily activities and follows the rules in the bye-laws. Members attend meetings and take part in decision-making. The goal of management is to serve all members fairly, not to make huge profits.
Limited Liability Company (LLC):
In an LLC, management is controlled by a Board of Directors elected by shareholders. Shareholders with more shares have more votes and influence. The directors make major decisions and hire managers to run daily activities. The focus of management is to make profits for shareholders and grow the business.
(5c)
-PROFITS-
Co-operative Society:
After paying expenses, any remaining money is called a surplus. This surplus is shared among members based on how much they used the co-operative’s services, not on how much money they invested. Some of the surplus is kept to improve the society or saved as a reserve. Profit-making is not the main goal.
Limited Liability Company (LLC):
A company earns profit through its business and shares part of it as dividends to shareholders. The more shares a person has, the more dividends they receive. Some profit may be kept for expansion or investment. The goal is to maximize profit.
(5d)
-RIGHTS OF MEMBERS/SHAREHOLDERS-
Co-operative Society:
Each member has one vote, no matter how much money they contributed. They can attend meetings, vote, and receive a share of the surplus based on their participation. Members may join or leave freely, but usually cannot transfer their shares to others.
Limited Liability Company (LLC):
Shareholders have voting power based on shares owned. They can vote at meetings, receive dividends, and transfer or sell shares freely. They also enjoy limited liability, meaning they are only responsible up to the amount they invested.
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(6)
(i) Provision of Capital through Loans and Financial Support: The government can support industrial growth by making funds available to individuals and businesses who want to start or expand industries. This is often done through special financial institutions, such as industrial or development banks, which offer loans at low interest rates. With easier access to capital, investors can buy machines, raw materials, and modern technology. This financial support reduces startup costs and encourages more entrepreneurs to go into manufacturing.
(ii) Development of Infrastructure: Industries need good infrastructure to operate smoothly. The government plays a major role by providing reliable roads, electricity, water supply, and communication systems. For instance, good roads reduce transportation costs for raw materials and finished products, while steady electricity improves production. When infrastructure is in place, industries perform better, and both local and foreign investors are more likely to invest.
(iii) Protection of Infant Industries: To help new industries grow, the government may protect them from foreign competition through policies like import tariffs, quotas, or outright bans on similar imported goods. These protective measures give local industries a chance to develop without being pushed out of the market by already established foreign companies. Once the local industries become strong enough, the government can gradually reduce these protections.
(iv) Direct Government Participation and Industrial Estates: The government may take direct steps by investing in industries, especially in important sectors like steel, oil, or chemicals. It can also create industrial estates which are special areas with ready-made infrastructure such as roads, water, electricity, and waste disposal systems. These zones reduce the cost and stress of setting up industries, especially for new investors. In addition, governments may support research and development to improve production methods and boost innovation.
(v) Provision of Education and Training for Skilled Labour: Industrialisation depends on a skilled workforce. The government can help by establishing technical schools, vocational training centers, and polytechnics. These institutions train workers in skills such as machine operation, maintenance, and industrial management. When workers are properly trained, productivity increases, and industries can compete better both locally and internationally.
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(7a)
Balance of Payments (BOP) is a record of all money transactions between one country and other countries over a certain period, usually a year. It shows all the money coming into the country (credits) and all the money going out (debits) for things like goods, services, investments, and loans. The BOP includes trade in goods (exports and imports), services, and financial transactions. It helps a country know if it is earning more money from abroad than it is spending or vice versa. Ideally, the total money coming in should equal the money going out, but sometimes there is a surplus or deficit.
(7b)
(i) Devaluation of Currency: The government can reduce the value of its currency compared to other currencies. This makes exports cheaper and more attractive to foreign buyers, increasing export sales. At the same time, imports become more expensive, so people buy fewer imported goods, reducing money leaving the country. This helps improve the balance of payments by increasing foreign earnings and reducing spending abroad.
(ii) Import Restrictions: The government can limit imports by imposing tariffs (taxes) or quotas (limits) on foreign goods. This reduces the amount of money spent on imports and encourages people to buy locally made products, helping to improve the trade balance. Import restrictions protect local industries and help save foreign exchange.
(iii) Encouraging Exports: The government can support exporters by providing subsidies, tax breaks, or improving infrastructure like roads and ports. This helps local businesses sell more goods abroad, bringing more money into the country. Increased exports lead to more foreign currency inflow, which helps reduce the deficit.
(iv) Borrowing from Other Countries: If there is a short-term deficit, the government may borrow money from foreign countries or international organizations. This helps cover the gap while the country works on improving its trade balance. However, borrowing should be managed carefully to avoid future debt problems.
(v) Promoting Foreign Investment: The government can encourage foreign companies to invest in the country by offering incentives like tax holidays or easy business rules. Foreign investment brings in capital and can help increase production and exports. This creates jobs and increases the country’s foreign exchange earnings.
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(9a)
Debt Servicing: This refers to the regular payment of interest and repayment of the principal on a country’s external or internal loans. It includes both scheduled interest payments and repayments on the original amount borrowed. High debt servicing can reduce the amount of money a government has to spend on other important sectors like education, health, and infrastructure.
(9b)
Gross National Product (GNP): This is the total monetary value of all goods and services produced by the citizens of a country (both within and outside the country) in a given year. GNP includes income earned by nationals abroad but excludes income earned by foreigners within the country. It is used to measure the overall economic strength of a country.
(9c)
Disinflation:
This is the slowing down of the rate of inflation. Prices are still rising, but at a slower pace than before. It is different from deflation, where prices actually fall. Disinflation usually occurs due to government policies like reducing money supply, increasing interest rates, or cutting public spending to control high inflation.
(9d)
Surplus Budget: A surplus budget occurs when a government’s expected revenue is greater than its planned expenditure during a financial year. This means the government is spending less than it earns. A surplus budget may be used to reduce debt, save for future needs, or support economic stability, but too much surplus may slow down economic growth.
(9e)
Poverty Alleviation: This refers to government or non-government efforts aimed at reducing poverty and improving the living conditions of the poor. This may involve creating jobs, improving access to education and healthcare, providing micro-credit to small businesses, and running food or housing programs. The goal is to help people become self-reliant and escape the cycle of poverty.
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(10a)
Localisation of industries refers to the concentration of many firms or businesses producing similar or related goods in a particular area or region. For example, several textile companies may be located in one town, or many car manufacturing plants may be set up in the same city. This often happens due to the availability of raw materials, skilled labour, good transport, or favourable government policies. Localisation leads to the formation of industrial hubs or clusters where businesses can benefit from working close to each other.
(10b)
=ADVANTAGES=
(i) Availability of Skilled Labour: When many industries are located in the same area, workers develop special skills needed for those industries. This is because they get experience working in similar factories. Also, training centers and technical schools often open nearby to teach the required skills, making it easier for industries to find qualified workers.
(ii) Reduced Costs through Shared Facilities: Industries in the same location can share important facilities like roads, electricity, water supply, and communication networks. This sharing lowers the cost of production for each firm because they don’t have to build or maintain these facilities alone. It also makes transportation of raw materials and finished goods faster and cheaper.
(iii) Development of Supporting Industries and Services: Localisation attracts related businesses such as suppliers of raw materials, spare parts, packaging, and repair services. These supporting industries reduce the cost and time for the main industries to get what they need. It also creates more jobs and helps the local economy grow.
=DISADVANTAGES=
(i) Overdependence on One Industry: If many industries in the area produce similar goods, the local economy becomes dependent on that industry. If demand for those goods falls or if the industry faces problems like strikes, raw material shortages, or price drops, many people can lose their jobs and the area’s economy can suffer badly.
(ii) Environmental Pollution and Congestion: Having many industries in one place can cause pollution of air, water, and land. It can also lead to traffic congestion and overuse of local resources like water and land. This harms the environment and can cause health problems for people living nearby.
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(11a)
(i) A budget deficit occurs when government expenditure exceeds its revenue, while a budget surplus occurs when government revenue exceeds its expenditure.
(ii) A deficit may cause the government to borrow money or print more currency, whereas a surplus allows the government to save money, reduce debt, or invest in development projects.
(11b)
(i) Raising Capital for Businesses: The stock exchange allows companies to raise money by selling shares to the public. This money, called capital, helps businesses expand, buy new equipment, or start new projects. Without the stock exchange, companies would find it difficult to get large amounts of money from many investors. This function supports business growth and development.
(ii) Providing Liquidity to Investors: The stock exchange makes it easy for investors to buy and sell shares quickly. This means investors can convert their shares into cash whenever they want. This liquidity encourages more people to invest because they know they can sell their shares easily. It also helps keep the market active and efficient.
(iii) Price Determination: The stock exchange provides a place where the prices of shares are set by the forces of supply and demand. When many people want to buy a share, its price goes up; when more people want to sell, the price goes down. This helps investors know the current value of shares and make informed decisions. It also reflects how well a company is performing.
(iv) Encouraging Investment and Economic Growth: By providing a safe and regulated place to invest, the stock exchange encourages people to save and invest their money in companies. This increases the amount of money available for businesses to grow, which creates jobs and improves the economy. A strong stock exchange signals a healthy economy and attracts both local and foreign investors.
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(12)
(i) Improve Working Conditions and Salaries: Many Nigerian professionals, especially doctors, nurses, and teachers, leave the country because of poor working conditions and low pay. The government should increase salaries and provide better welfare packages to make these jobs more attractive. Additionally, upgrading workplace facilities and ensuring a safe and supportive environment will encourage professionals to stay. For example, many Nigerian doctors migrate to countries with better hospital equipment and higher wages. Improving these conditions will reduce the urge to seek work abroad.
(ii) Invest in Infrastructure and Technology: A major reason for brain drain is the lack of modern infrastructure such as hospitals, research centers, and schools. The government must invest in building and upgrading these facilities, including reliable electricity, internet access, and transportation networks. When professionals have access to good tools and technology, they can perform their jobs effectively and feel motivated to remain in Nigeria. For instance, researchers and engineers need modern laboratories and equipment to innovate and compete globally.
(iii) Create More Job Opportunities and Career Growth: Limited job opportunities and unclear career advancement paths push many skilled Nigerians to look for work abroad. The government should encourage entrepreneurship and support the growth of small and medium enterprises (SMEs) through loans, training, and favorable policies. This will create more jobs and allow professionals to develop their careers at home. Providing professional development programs and clear promotion pathways will also help retain talent.
(iv) Engage the Nigerian Diaspora and Encourage Return: Many Nigerians living abroad have valuable skills and experiences. The government can create programs to connect with the diaspora, encouraging them to return or invest in Nigeria. Initiatives like tax incentives, grants, and reintegration support can make returning more attractive. Diaspora professionals can also mentor local workers or start businesses that create jobs. For example, the “Return2Naija” program aims to bring skilled Nigerians back home to contribute to national development.
(v) Improve Governance, Security, and Political Stability: Insecurity, corruption, and poor governance are major reasons why professionals leave Nigeria. The government must fight corruption, ensure transparency, and improve national security to build trust. Political stability and a safe environment make people feel secure about their future. When professionals believe the country is well-managed and safe, they are more likely to stay and contribute to its growth.
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